Dow Jones futures rallied 200 points ahead of Tuesday’s open. The Dow Jones Industrial Average finished in a bear market, a drop of 20% or more from a recent high, selling off more than 300 points Monday.
Stock Market Today
On Monday, the Dow Jones Industrial Average sold off 1.1%, while the S&P 500 dropped 1%. The tech-heavy Nasdaq composite declined 0.6%. And the small-cap Russell 2000 lost 1.4%.
Key earnings reports this week are coming from Jabil (JBL), Cal-Maine Foods (CALM), CarMax (KMX), Cintas (CTAS), Jefferies (JEF), Micron Technology (MU), Dow Jones stock Nike (NKE) and Paychex (PAYX).
In the ongoing stock market weakness, DoubleVerify (DV), Hostess Brands (TWNK), Neurocrine Biosciences (NBIX), Toro (TTC) and Vertex Pharmaceuticals (VRTX) — as well as Dow Jones stock UnitedHealth (UNH) — are among the top stocks to watch. Keep in mind that the deepening stock market correction is a great reason for investors to sit on the sidelines.
Dow Jones Futures Today: Treasury Yields, Oil Prices
Ahead of Tuesday’s open, Dow Jones futures rose 0.65% vs. fair value, while S&P 500 futures gained 0.7%. Nasdaq 100 futures moved up 0.8% above fair value. Remember that overnight action in Dow Jones futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
The 10-year Treasury yield surged to 3.87% Monday, hitting another new high. The 10-year Treasury yield is at its highest level since April 2010 when it peaked around 4.01%. Meanwhile, U.S. oil prices continued lower Monday, falling nearly 3%. West Texas Intermediate futures traded below $77 a barrel, their lowest level since early January.
What To Do In The Worsening Stock Market Correction
Amid persistent selling across the major stock indexes IBD’s market trend remains in a “market in correction.” That means that investors should be defensive and on the sidelines.
To prepare for a new stock market rally, investors should be waiting for a follow-through day. When the market is in a correction, look for at least one major index to attempt a bottom. We are still looking for the first day that the index closes higher counts as Day 1 of its attempted rally. The action on Day 2 and Day 3 is irrelevant as long as the index doesn’t undercut its latest low. If that low is undercut, the rally try is done and the market needs to try again.
On Day 4 and later, you are looking for the Nasdaq or S&P 500 to rise sharply in higher volume than the previous session. That’s a follow-through day. It gives investors the green light to start buying leading stocks breaking out past correct buy points. It should put your portfolio and mindset in sync with the stock market action by gradually committing capital to leading stocks.
Nevertheless, it is important for investors to put this downtime to good use. Now is an ideal opportunity to study market bottoms and to build a strong watchlist of top-performing stocks. Many long-term leaders tend to break out at or near the follow-through, the market bottoming signal. Missing that early opportunity can be a costly mistake.
Monday’s The Big Picture column commented, “At one point Monday, the Nasdaq composite was up 1.4%. It turned out to be a mirage, as the stock market indexes quickly faded and closed with more losses. The faux rally was symptomatic of bear markets, when stocks often find strength in the early hours but buyers disappear by the close.”
Dow Jones Stocks To Watch: UnitedHealth
Dow Jones stock UnitedHealth declined 1% Monday, stemming its slide around the long-term 200-day line. Shares are building a flat base that has a 553.23 buy point, according to IBD MarketSmith chart analysis. With shares about 8% from their 52-week high, they have their work cut out for them ahead of a potential breakout.
UNH stock shows a strong 95 out of a perfect 99 IBD Composite Rating, per the IBD Stock Checkup. Investors can use the IBD Composite Rating to easily gauge the quality of a stock’s fundamental and technical metrics.
Top Stocks To Watch: DoubleVerify, Hostess, Neurocrine, Toro, Vertex
IBD Leaderboard stock DoubleVerify is still below its 28.07 buy point in a bottoming base despite Monday’s 0.55% rise. Per Leaderboard commentary, DoubleVerify has reversed below an early trendline entry near 27 in a bottoming base and is seeking support near its 50-day line.
Twinkie maker Hostess Brands is in the 5% buy area above a cup with handle’s 23.23 buy point, according to IBD MarketSmith chart analysis. Bullishly, Hostess’ RS line is at new highs. Keep in mind that the weak market trend should keep you on the sidelines, but it is one of the top stocks to watch.
Wednesday’s IBD 50 Stocks To Watch pick, Neurocrine Biosciences, is building a flat base that has a 109.36 buy point. Shares finally gave up support around their 50-day line Monday, dropping 2.8%. Despite Monday’s slide, the RS line hit a new high last week, so the stock has avoided much of the market’s weakness.
Vertex Pharmaceuticals is falling further below its 50-day line following Monday’s 2.35% loss. It is forming a flat base with a 306.05 buy point. The stock’s resilience makes it a top idea to watch.
Tesla stock moved up 0.25% Monday, snapping a four-day losing streak. Still, shares are sharply below their 50-day line following last week’s heavy losses.
Last week, the stock’s relative strength line reached its highest level since April, but has fallen sharply in recent sessions. Shares are about 34% of their 52-week high.
Dow Jones Leaders: Apple, Microsoft
Among Dow Jones stocks, Apple shares climbed 0.2% Monday, ending a three-day losing streak. The stock is trading near recent lows, even as its RS line hit another new high Monday.
Microsoft lost 0.2% Monday, ending just off Friday’s 52-week low price. The software giant is more than 30% off its 52-week high.
Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on growth stocks and the Dow Jones Industrial Average.
YOU MAY ALSO LIKE:
Read More: Futures: Correction Deepens; What To Do Now